Lorry Lokey, who co-founded Business Wire in 1961 with his wife, Eva, and saw it grow to $134M in sales by 2006 when he sold it to Berkshire Hathaway for a rumored $500M+ (although no price has been confirmed by BH), is profiled in the spring Oregon Quarterly of the University of Oregon.
He said profits became so huge they were “obscene” and “embarrassing” and that by 2006 he was “taking home $100,000 every workday” (about $26M yearly).
Despite the big profit margin, BW in January raised the rate on its national wire from $625 to $650.
Also highly profitable is PR Newswire, which had adjusted operating profit of 49.1 million pounds in 2007 (about $98M), contributing almost a third of parent UBM’s overall after-tax profit of 114M pounds.
Tax rate of UBM is about 15%. PRN kept its national rate at $650.
Lokey says that in 1986 PR Newswire offered to buy BW for $20M and threatened to “run us over” if the offer was refused. But the threat proved to be “hollow,” he said.
Two other PR wire services also recently raised their prices—Marketwire to $460 from $415 for its national wire, and PrimeNewswire to $435 from $395 for its national wire.
Wife Not Mentioned in Article
Eva Lokey, from whom Lorry Lokey was divorced in 1990, is not mentioned in the article.
However, she co-founded the business with him and continued to hold a 50% interest in it after the divorce. She had a master’s degree in speech from San Francisco State University.
She was to take a “more active role in BW, Lokey said, chairing meetings of the board. Lokey at the time called the divorce “an amicable one” that did not even involve lawyers and said everything would be “divided in half.” He said the divorce was a “non-event” in relation to the business and that he had wanted to end the marriage ten years previously.
He and Eva “get along great,” he told O’Dwyer's Newsletter.
Conglomerate PR Firms Use Wires
The logos of Porter Novelli, Ketchum, Fleishman-Hillard, Ogilvy PR Worldwide, Hill & Knowlton and Burson-Marsteller were part of a slide presentation to analysts about PR Newswire by executives of UBM last year.
The logos of conglomerate PR firms were part of a slide presentation to analysts about PR Newswire by executives of UBM last year. |
The logos were under a headline that said: “Driving Growth in PR Sector” and indicated that volume from the PR firms (and other companies, said UBM) was $23.1M in the first half of 2007, up 18.9% from first half volume of $19.4M.
Placing news on either PRN or BW or both is often routine at some firms, which normally mark up such purchases by 15% to 20%.
The electronic releases go into databanks of news and financial outlets where they can be retrieved. The services also report pick-ups by websites and blogs and can generate physical clips of stories if desired by clients.
The services are not “disclosure media” as required by the SEC and stock exchanges but reach them—AP, Dow-Jones, New York Times, Bloomberg, USA Today and Investor’s Business Daily. Sending information to any of these outlets satisfies disclosure requirements.
Gifts to Stanford, UO
Lokey, a 1949 graduate of Stanford University said he “fell in love” with journalism when he joined The Stanford Daily as a reporter, later becoming its editor. He has given more than $85M to the University including $33M to its School of Medicine and funds for a new building for the newspaper.
He has given “nearly $132M” to the University of Oregon, said the Oregon Quarterly.
The interest in UO springs from the fact that George Turnbull, one of his Stanford journalism professors, who was dean of the UO Journalism School from 1944-48, gave him his first job with United Press when he graduated from UO.
Lokey told the Quarterly he wanted to go to Oregon but an uncle convinced him that Stanford was better.
Early Career in Journalism, PR
Lokey in a
1988 file photo |
After a year at UP’s Portland office, he worked for the Longview Daily News in Washington until 1952 when he joined the Western Highway Institute. He joined Shell Development Co. in 1953 in PR.
From 1955-61 he was at the General Electric news bureau in San Francisco, rising to bureau supervisor. An effort by him and Eva in 1959 to start a PR wire service failed but business conditions improved by 1961 and they opened another office with seven clients and a part-time employee.
The Lokeys had three daughters, the article notes, although their names are not mentioned.
At one point he transferred most of the remaining BW stock to them and to a foundation. He realized he had “one hell of a big estate” and that “if I kick off, the government will take such a huge slice it will put us out of business.”
Business Week (Nov. 26, 2007) described Lokey as one of the 50 “Greatest Givers” with gifts to charities totaling about $435M.
Employees Urged Sale
Lokey told the Quarterly that BW had been “on the block” since 2002.
“We were for sale because everyone on the board wanted to become millionaires,” he said.
CEO Cathy Baron Tamraz, at the suggestion of her husband who had read a profile of Warren Buffet, sent Buffet a letter offering him BW.
Buffet called her one evening, showing interest.
The sale went through that was “likely well on the high side of a half-a-billion dollars,” says the magazine.
Takeover Attempted by PRN
PRN, Lokey told the Quarterly, issued an ultimatum in 1986, telling him to sell out to them for $20M or they would “run us over.”
There was an all-day meeting with “PRN brass” and Lokey concluded “they were really trying to kill us.”
Lokey said he just “laughed at them” and said he felt BW would be worth far more than that down the road.
He worked at expanding the business and the PRN “threat” turned out to be “hollow, he said.
By 2006, BW had more than 25,000 clients, 500 employees and 31 offices worldwide.
Lokey Is Lauded
The Quarterly is unstinting in its praise for Lokey, saying he has “embarked on a little second career: changing the world by giving away virtually all of his income.”
The gifts, says the article by Portland writer Todd Schwartz, “quite literally, have the potential to change the world for the better.”
Lokey’s generosity has extended to his employees and includes a pension trust, profit-sharing, bonuses, a nursery, and loans to employees “for everything from new homes to kitchen remodels to babies.”
Lokey, who is quoted as saying, “I’ve always missed reporting,” is described by Schwartz as “smart, innovative and competitive as hell” with timing that was “mostly flawless.” |